Signs for China Telecom, China Mobile and China Unicom hang at the China International Import Expo at the National Exhibition and Convention Center in Shanghai on Nov. 5, 2018.ALY SONG/Reuters
The New York Stock Exchange said on Wednesday it will delist three Chinese telecom companies, confirming its latest reversal on the matter a day after U.S. Treasury Secretary Steve Mnuchin told the NYSE chief he disagreed with an earlier decision to reverse the delistings.
The latest move, which is effective Jan. 11, marks the third time in less than a week the Big Board has ruled on the matter. The flip-flopping highlights the confusion over which firms were included in an executive order issued by President Donald Trump in November barring U.S. persons from investing in publicly traded companies Washington deems to be tied to the Chinese military.
It also comes amid escalating tensions within Washington on China policy in the final days of the Trump administration.
“There is a unique situation where there is an outgoing administration that is disengaged and [there are] orders sitting out there, so something has to be done, but no one wants to take on responsibility,” said Leland Miller, the chief executive of the U.S.-based consultancy China Beige Book. “I think in future that anyone getting these orders will say: ‘Tell us exactly what you want us to do,’ and force administrations to be more focused.”
The NYSE originally on Thursday announced plans to delist China Mobile Ltd., China Telecom Corp. Ltd. and China Unicom Hong Kong Ltd. On Monday it did a U-turn after consulting with regulators in connection with the U.S. Treasury’s Office of Foreign Assets Control and decided to keep them listed. Wednesday’s decision marks a return to the original plan.
The U-turn to keep the companies listed prompted criticism that the Treasury was being dovish on China.
Mr. Mnuchin has long been seen as seeking to thwart attempts by hardliners in the administration - many led by the State department - to crack down on Chinese companies.
But sources who asked to remain anonymous owing to the sensitivity of the matter said Mr. Mnuchin had called NYSE president Stacey Cunningham on Tuesday to express his concerns over the decision to relist the companies, as the exchange sought further confirmation on the matter.
“The Treasury secretary was on the phone with the NYSE [president] now and was told that NYSE would reverse their decision,” a U.S. official told Reuters on Tuesday.
On Wednesday, the exchange operator said in a statement that its latest decision to move forward with the delistings was based on “new specific guidance received on January 5, 2021, that the Department of Treasury’s Office of Foreign Assets Control.”
Trading in the securities will be suspended at 4 a.m. Eastern Time on Jan. 11, the NYSE said.
A spokeswoman for the exchange operator declined to comment further.
The flip-flopping caused investors to sell positions in the securities, the prices of which dropped on the initial announcement, then rose on the next and tumbled again on Wednesday.
However, the final decision satisfied Republican Senator Marco Rubio, who had speculated the NYSE’s initial reversal was owing to the Treasury.
“After an intense pressure campaign from those of us who believe we should prioritize the interests of American workers and mom and pop investors above Beijing and Wall Street, I am pleased that the NYSE decided to reverse their earlier announcement,” he said in a statement.
Republican Senator Ben Sasse, a member of the Senate Select Committee on Intelligence, said the decision was the “right call.”
“Chinese firms that reject fundamental transparency requirements and have ties to the Chinese military shouldn’t benefit from American investment,” Mr. Sasse said.
NYSE-owner Intercontinental Exchange Inc (ICE) is run by billionaire Jeffrey Sprecher. His wife, Kelly Loeffler, also a former ICE executive and Republican senator, lost a run-off election on Tuesday in Georgia to Raphael Warnock, a Baptist preacher from the historic church of Martin Luther King Jr. who will become the first Black senator in Georgia’s history.
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